WASHINGTON – The U.S. Postal Service Board of Governors announced Friday the resignation of postmaster general and CEO Patrick R. Donahue on the same day it reported a $5.5 billion loss in fiscal year 2014.
The chairman of the Postal Service Board of Governors, Mickey D. Barnett, called Donahue a visionary leader who worked tirelessly to move the organization forward through one of its most difficult periods.
“Pat was the calm in the financial storm. He ignored the naysayers and went forward with his team and built a comprehensive plan for the future of the organization, made tough decisions, and executed against those decisions,” said Barnett. “That’s a testament to the great team he built and his own personal leadership.”
Commenting on the fact that the Postal Service has roughly 220,000 fewer employees today than it did in 2004, Barnett said “no other organization has restructured itself so dramatically and on such a large scale, and continued functioning at such a high level.”
“And it did so without relying upon employee layoffs.”
The Board of Governors appointed Donahue as postmaster general in October 2010, capping a 39-year career with the Postal Service that began with a clerk position while attending the University of Pittsburgh.
The Postal Service attributed the $5.5 billion net loss in 2014 largely to “legislative burdens and constraints.”
“This eighth consecutive annual net loss underscores the need for comprehensive legislation to repair the Postal Services’ broken business model,” it said in a statement.
The net loss included $5.7 billion for the prefunding requirement of the Postal Service Retiree Health Benefit Fund and an additional $1.2 billion in non-cash workers’ compensation expense.
Sen. Ron Johnson, R-Wisc., the incoming chairman of the Senate Homeland Security and Government Affairs Committee has already announced his belief the USPS should go through a bankruptcy process that could end up shredding costly union contracts to reduce operating costs.
The U.S. Government Accountability Office, GAO, has concluded the Postal Service’s business model doesn’t work.
“USPS’s financial condition has been designated as high risk because USPS’s business model is not viable as USPS cannot fund its current level of services, operations, and obligations from its revenues and urgently needs to restructure to reflect changes in mail volume, revenue, and use of the mail,” the GAO said in a posting on its website.
“Congress and USPS need to reach agreement on a comprehensive package of actions to achieve sustainable financial viability.”
A GAO study published April 17, 2013, titled “U.S. Postal Service: Urgent Action Needed to Achieve Financial Sustainability,” called for the USPS to modify the retiree health benefits payments “in a fiscally responsible manner.”
It said costs need to be aligned with revenues “based on changing workload and mail use given competition from the Internet and private services like Federal Express.
USPS also needs to “engage in binding arbitration to modify union collective bargaining agreements in accordance with the reality of the USPS’s continuing operating deficits running annually into billions of dollars.”
An editorial published Nov. 14 in the Santa Fe New Mexican said the “biggest obstacle facing reform is not partisan politics; it’s interest-group politics.”
“Postal unions, rural states, large-scale commercial mailers and others that depend on the dysfunctional status quo lobby furiously to protect it, or at least those parts of it that favor their particular interests,” the paper said.
“They’re less concerned with the public’s interest in modernizing the institution so that it won’t require a taxpayer bailout, beyond the $15 billion line of credit with the U.S. Treasury that it’s already used up,” the editorial continued.
“The latest evidence of the lobbies’ power is a push by roughly half the current Senate for a moratorium on the closure of inefficient mail-processing facilities in 2015.”